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Capitol Perspectives: Unintended Consequences

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During the past few weeks I’ve been wondering whether the “Law of Unintended Consequences” will become a defining signature for the 2013 session of Missouri’s General Assembly.

That’s a widely used phrase among public policy analysts to describe how well-meaning initiatives can have long-term adverse consequences that had not been realized in the rush to implement what seemed like great ideas.

Roger Roots, a lawyer and sociologist, used the term “When Laws Backfire” for a 2004 article on the phenomenon.

Some of the major issues before this year’s legislative session involve fixing the messes caused by the unintended consequences from laws passed years earlier.

For example, some half-dozen years ago, the legislature put a cap on how much businesses could be assessed to fund a program that provides health care coverage for workers re-injured on the job.

Over the years, the consequence of that cap has been to effectively bankrupt the Second Injury Fund — leaving thousands of injured workers without coverage and the state facing a massive lawsuit now pending before the state Supreme Court.

So, now lawmakers are trying to fix the mess.

They’re also trying to fix the mess of tax credits that originally were intended as relatively limited tax incentives for various benevolent activities. But they’ve ballooned to the point that those tax credits now cost the state more than one-half billion dollars each year in lost revenue claimed by various developers and business interests.

It’s not just profit-making real estate developers who have benefited from the tax-credit gravy train. The tax credit for adoptions is a perfect example.

Originally, it was designed to assist families to adopt needy Missouri children. But either deliberately or not, the law was not restricted to Missouri adoptions.

So, for several years a number of Missouri parents have gotten thousands of dollars in tax credits for foreign adoptions that do nothing to address the needs of Missouri children without permanent families.

Fixing that unintended consequence was one of the first two bills sent to the governor by the 2013 legislative session.

Easing sentences for first-time, non-violent offenders is a major issue in this year’s session. It comes in response to the state’s costly growth in prison populations. The prison population explosion was an unintended consequence of the anti-crime wave that swept through the legislature years ago that led to longer and mandatory sentences.

It’s been my experience watching this process over the decades that unintended consequences often arise when there is a legislative rush to pass something without full debate and with too little time provided for legislative staff to figure out all the potential unintended consequences.

That might be happening this year with the massive restructuring of the state’s tax system. Missouri’s Senate passed the bill even though their own staff concluded they could not determine whether the tax cuts would cost the state $244 million or $431 million by the 2016 budget year.

An uncertainty of nearly $200 million in lost state revenues is not pocket change.

It would not be the first time that a rush to cut taxes caused financial problems for future generations of legislators. Gov. Mel Carnahan’s call to eliminate the sales tax on groceries in 1997 led to years of financial problems for the state that continue to this day.

There had been a few who warned that the high growth in tax collections which prompted the tax cut would not continue. But few listened. How could lawmakers reject the idea of a tax cut offered by the Democratic governor? The tax cut won easy approval.

Just a few years later, a former state budget director, Jim Moody, warned that the state had cut its tax base so deeply as to be unable to assure ongoing support for the current level of state services during lean economic years.

There is no better vindication of Moody’s prediction than the state’s failure to meet its own funding goals for reducing the vast disparity among school districts in per-student spending for education.

The state now is hundreds of millions of dollars below their goal for education. And no fix to that mess has advanced in this year’s legislative session.

Legislative term limits play a role in this scenario of unintended consequences. There are few legislators with enough years in the statehouse to have seen, first hand, the unintended consequences from seemingly simple proposals.

But, then, the biggest unintended consequence I’ve seen in my time covering this place was that Mel Carnahan tax cut and related limits on future tax increases. And those came well before voter adoption of legislative term limits.